The Maritime and Commercial Court: CD Pharma has abused its dominant position by charging an excessive and unfair price for the drug Syntocinon
On 2 March 2020, the Maritime and Commercial Court has confirmed that it was illegal, when CD Pharma (a pharmaceutical distributor) abused its dominant position by increasing the price on Syntocinon from EUR 6 to a high level of EUR 127 corresponding to a price increase of 2,000 pct. The Competition Council first adopted a decision in the case in 2018.
The drug Syntocinon contains oxytocin, which is an active substance given to pregnant women in connection with childbirth. Syntocinon is used by public hospitals in Denmark, has existed since the 1950’s, and the patent expired long ago.
Amgros (a wholesale buyer for hospitals) had a tender on Syntocinon for the period of 1 April 2014 – 31 March 2015, which Orifarm – a parallel importer and competitor to CD Pharma – won. However, Orifarm was not capable of providing Amgros with the full amount of Syntocinon; therefore, Amgros had to buy the residual amount from CD Pharma who was the only alternative supplier of Syntocinon on the Danish market. During the period, Orifarm tried to provide Syntocinon in accordance with the contract, but it was not possible for Orifarm to source enough Syntocinon to cover Amgros’ full demand. Due to CD Pharma’s exclusive distribution agreement with the producer of Syntocinon, CD Pharma was guaranteed supply, contrary to parallel importers such as Orifarm.
During 2007-2014, the price was stable around DKK 44 (EUR 5.9). From 28 April 2014 until 27 October 2014 CD Pharma increased the price on Syntocinon from DKK 45 (EUR 6) to DKK 945 (EUR 127) corresponding to a price increase of 2,000 pct.
During a period of six months, Amgros ended up paying a little less than DKK 6 million (approximately EUR 780,000) more than the price agreed upon in the original contract with the parallel importer.
CD Pharma has not been able to justify the increased price with for instance increased costs or special considerations related to research and development.
The case has been reported to the Danish State Prosecutor for Serious Economic and International Crime.